Wednesday, March 21, 2012

A transaction tax will always be profitable to avoid at a high enough level

Is a 7% stamp duty a workable mansion tax?

Don't know how on earth they think they'll enforce this. The 5% SDLT on £1m+ is very rarely paid as £50k+ can get you a very good accountant. £140k+ will allow just about every £2m+ buyer to avoid it. Offshore companies can't be monitored for share ownership changes, so that's a non-starter. How you tell whether a domestic company is a 'wrapper' or not is going to be the subject of much litigation and wasteful collection expenses. Again, the government has not made this a tax on the amount over £2m, so there's a 'black hole' between £2m and £2.14m where no sales will occur, and of course at just above that level, cheaper avoidance measures are available. On a £2.05m spot, £50k are deemed as chattels and the SDLT is £100k instead of £143500.

Posted by mombers @ 10:14 AM (1548 views)
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19 thoughts on “A transaction tax will always be profitable to avoid at a high enough level

  • The key words to look out for with the new stamp duty avoidance stuff are “live in”. On the telly the other morning G.O.
    mentioned that stamped duty avoidance would be clamped down on nasty rich people who “… live in …” properties
    they’ve used off shore tax loopholes to avoid stamp duty. Thing is most of this bunch don’t actually “live in” these places. A
    prime example is this

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  • … and this

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  • mark wadsworth says:

    In answer to the BBC’s question, no of course not, this is tokenism at best and is deliberately designed so that people can run rings round it.

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  • MW totally agree, it’s a rotten carrot to help the masses with the big stick.

    If GO was serious about closing off shore loop holes, he’d start with those used for centuries by the heraldic peers in the HoL
    and then he could clamp down on CGT reliefs on multi property owners.

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  • Marxists who want to maintain stupid high spending will always call for new taxes. Each one more virtuous than the next, with re-distribution of wealth the main sweetener. Well, that is what motivates the bank robber also, and morally speaking they are one and the same, for it is no difference morally, whether money is stolen by private individuals or the State. The commandment is simple and just, “Thou shalt not steal”.

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  • libertas, your moral compass has been greased up by you’re grubby hands. Marxist LOL.

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  • mark wadsworth says:

    DW, I especially like the way Libertwat that says “Thou shalt not steal”, while at the same time he cravenly worshipping at the altar of Home-Owner-Ism aka Blue Socialism, the most massive wealth plundering system ever invented.

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  • “The government that robs Peter to pay Paul can always count on the support of Paul” George Bernard Shaw

    As there are significantly more Pauls that Peters, thats all you really need to know.

    btw, i’m with libertas on this. I don’t see how now wanting to have more taxes imposed on you makes you money grubbing. now taking from others to give you yourself, is. We have the lib dems procliaming this is a robin hood budget. It amazes me that the people who cliam the moral high ground are happy to see the morility of giving to the poor, but are completely blind to the immorality of taking from the productive section of society to pay for it, for no other reason that they can generate income.

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  • @mark wadsworth – Slightly different topic.

    I was just discussing LVT with some colleagues. They seem to think that it would be unfair for someone who earns earns hundreds of thousands a year and lives in bedsit to pay little/no tax.

    What do you think?

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  • On topic and from the budget:

    “13.18 Stamp duty will go up from 5pc to 7pc on properties worth more than £2m – from tonight.

    If you put your property in a “corporate envelope” the rate will be 15pc. The government will also consult on a large charge on residential properties already contained in corporate envelopes. “

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  • as opposed to someone who earns hundreds of thuosands of pounsd and lives in a mansion?

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  • @khards – a person living in a bedsit just to avoid tax is doing everyone a favour as it frees up more housing for everyone else. I can’t see anyone doing this though. I know many people who earn hundreds of thousands of pounds a year who happily splash out on nice rented houses

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  • mark wadsworth says:

    Khards 9, yes, for some reason little old ladies all live in Mansions and millionaires live in bedsits,

    Firstly, Mombers has more or less answered that.

    Secondly, the point of being rich is to have a nice car (and rich people tend to buy nicer and more expensive cars, despite the VAT is much higher), to go on the nicest holidays (even if they end up paying a lot of e.g. VAT in the other country), send your kids to the best schools (even if this means waiving your children’s “free” state education and paying double) and also to live in the nicest houses (even if the tax on nice houses is higher – if just pushes down the selling price or rent). The number of really high earners who will end up in bedsits is minimal (same as now), and the number doing it purely to minimise their tax bills is precisely zero. Ultimately, it will be something to boast about at dinner parties (“Our Domestic Rates are £30,000 a year! Isn’t that awful?” – sub-text: “We can easily afford to pay £30,000 a year to live in a swanky house, that’s how rich we are.”).

    Thirdly, the bulk of people with really high incomes are people who leech off land rents or taxes, i.e. bankers, landlords, developers, politicians, quangocrats and Libertwat. Their earnings will fall mightily if LVT were in place.

    Fourthly, it is ultimately a moral question. If somebody works really hard and earns his money by making the world a slightly better place, why is it “fair” to make him pay a lot of tax? Is this not fairer for the government to get income by levying user charges on plots of land with access to the best amenities?

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  • The point being the guys who thought this is unfair are both from Malaysia and plan on returning one day with some wealth.

    I think LVT would be good for the Polish community too.

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  • mark wadsworth says:

    Khards, good for them, in which case they can stay in a bedsit while they’re here and return with even more cash in their pockets.

    Not sure of the relevance of Poles, or are you referring to the urban myth that they all live six to a room in shared houses?

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  • khards,

    People earning hundreds of thousands don’t live in bedsits. Why on earth would they? Property is a positional good, a status symbol: rich people want to live in big houses not merely for the tax breaks but for the status it confers. Taxing status symbols is one of the easiest ways to raise revenue (hence the popular idea of a luxury tax).

    Foreign workers don’t make much use of services. If you’re a Polish plumber or an Indian programmer living in a bedsit then you aren’t likely to be a burden on the state. Nevertheless, every time you buy goods or services, you pay VAT directly and you pay business rates and corporation tax indirectly.

    With the income tax personal allowance rising to £9,000 (and in future rising to £10,000), a migrant Spanish waiter on minimum wage might easily pay no income tax anyway. They’re already paying very little.

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  • Drewster, the point is that these guys are living here on a temporary basis sharing a flat, they earn 30k to 40k. Is it right that the pair of them pay less in tax than a couple who is planning on living here permanently so buys themselves a modest house and the wife stays at home?

    The point is the pair of temporary (although in this case permanent residents) would pay less tax in total than the man who is working to pay for a modest house.

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  • @khards a lot of these ‘guys’ are working cash in hand so not paying tax anyway.

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  • mark wadsworth says:

    Khards, don’t make diagonal comparisons like this: ” Is it right that the pair of them pay less in tax than a couple who is planning on living here permanently so buys themselves a modest house and the wife stays at home?” That’s Daily Mail tactics.

    The correct question is, should two well paid Malays living in a big house pay more LVT than two well paid Malays living in a small house? Yes.

    Should a couple planning on living here etc in a modest house pay less than a couple planning on living here etc in a large house? Yes.

    Should a high earner Malay couple etc living in a xyz house pay the same as the couple next door in an identical hosue? Yes.

    Please only ever change one variable at a time. Otherwise I could ask “Should a multi-millionaire convicted sex offender and weapons dealer living in a cardboard box pay less tax than a hard pressed family consisting of a nurse, a police officer and their disabled child living in a mansion that’s been occupied by their family for generations etc”

    Or you might as well argue that booze duty is evil because the Islamists hardly pay any. “Is it right that the working man has to pay alcohol duty but Abu Hamza pays none?” I mean what sort of question is that?

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